Is Your Company Ready?
Effective January 1, 2024, many companies in the United States must report information about their beneficial owners—the individuals who ultimately own or control the company—to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
Who Has To Report?
A corporation, a limited liability company (LLC), or a company that was otherwise created in the United States by filing a document with a Secretary of State or any similar office under the law of a state or Indian tribe.
What Is Reported?
Any individual who directly or indirectly:
Exercises substantial control over a reporting company
OR
Owns or controls at least 25 percent of the ownership interests of a reporting company.
What Is Substantial Control?
An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:
- The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function).
- The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
- The individual is an important decision-maker for the reporting company. Important decisions include decisions about a reporting company’s business, finances, and structure. An individual that directs, determines, or has substantial influence over these important decisions or exercises substantial control over a reporting company.
Are some companies exempt from the reporting requirement?
Yes, 23 types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies. For a full detailed list of the 23 exempt entities click here.
Does the activity or revenue of a company determine whether it is a reporting company?
Sometimes. There is an exemption for certain inactive entities, and another for any company that reported more than $5 million in gross receipts or sales in the previous year and satisfies other exemption criteria. Neither engaging solely in passive activities like holding rental properties, for example, nor being unprofitable necessarily exempts an entity from the BOI reporting requirements.
The full list of FAQs are found here.
PPL CPA will not be responsible for advising you regarding the legal or regulatory aspects of your company’s compliance with the CTA, nor are we responsible for the preparation or submission of beneficial ownership information reports to FinCEN.